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PURCHASER'S RESPONSIBILITY TO
CONFIRM FINANCING ARRANGED:
It is the purchaser's responsibility to arrange any mortgage financing
which might be required to complete the purchase. Once the mortgage is
arranged, it will be the purchaser's responsibility to:
- satisfy any special requirements by the
lender (e.g. - proof of income, proof of cash down payment, payment
of other debt obligations, if required by the mortgage lender, etc.)
in order to avoid last minute financing problems on closing day;
- confirm with the mortgage lender that
mortgage instructions have been sent to our law office so that we can
finalize processing the mortgage financing and obtaining mortgage funds
for closing.
PRE-APPROVAL IN WRITING:
It is highly recommended that if a buyer chooses to seek pre-approval,
(before a property is purchased), such pre-approval should be in writing,
confirming the terms of the pre-approval and mortgage.
IF USING A POWER OF ATTORNEY:
Mortgage lenders NOW require a copy of the power of attorney document to be used (if any) for a mortgage since mortgage lenders MUST NOW pre approve any power of attorney form being used. Typically, to be approved, the borrower must be an existing customer of the bank OR must have signed the power of attorney document while in Ontario with witnessing done by an Ontario Lawyer.
CONDITIONAL ON FINANCING:
It is highly recommended that if financing is required (whether it has
been pre-approved or not), any agreement of purchase and sale should be
conditional upon written confirmation of financing terms from an institutional
lender.
OPEN/CLOSED MORTGAGES:
Open mortgages may usually be paid off at any time without a penalty.
Closed mortgages cannot be paid off before the end of the mortgage maturity
date without being subject to a penalty (i.e. the greater of 3 months
interest or the value of the difference in interest rates).
ACCELERATED PAYMENT OPTIONS:
Institutional lenders usually offer accelerated payment options in the
form of bi-weekly or weekly payment plans that can reduce the duration
of the mortgage by paying more towards principal and thereby reducing
the total interest cost.
CMHC (CANADA MORTGAGE AND HOUSING
CORPORATION) MORTGAGES:
Be aware that if a purchaser is arranging an insured mortgage (where the
cash down payment is less than 20% of the purchase price), the mortgage
lender (on closing) will deduct certain costs from the mortgage advance.
PLEASE CONFIRM with the mortgage lender as to what costs will be
deducted (For Example: 8% provincial sales tax on the mortgage
insurance premium, appraisal fee, property tax holdback or interest adjustment,
if any). For further information contact your bank branch.
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